SoftBank-backed True Balance revenue jumps by 50% in FY19, losses at Rs 46 Cr

It seems that the “natural evolution” from being a balance checking the app to bill payment and recharge platform has helped True Balance bring a slight improvement in their financial performance in FY19.

The revenues have increased by 49.8% from Rs 5.97 crore in FY18 to Rs 8.95 crore in FY19. This is a slight improvement as the amount spent on earning every penny has slightly gone down from Rs 6.56 to Rs 6.14.

The total expenses of the firm were Rs 39.15 crore in FY18 and have grown in tune of 40% to Rs 54.92 in FY19.

Meanwhile, the losses in FY19, grew 39% from Rs 33.12 crore to Rs 46.05 crore.

Operational revenue of the firm, however, rose by 34.6% from Rs 5.83 crore to Rs 7.85 crore. In this, the advertisement revenue went down 11.5% but the commission income took a 3.6X jump to Rs 3.14 crore. The operational revenue to expense ratio has gone up from 0.143 to 0.149.

The reason behind this being that the commission received on payments and recharge increased. A new pay later service launched during the year also brought in extra revenue of Rs 14 lakhs. The True PayLater has reportedly clocked 1 million transactions till now.

The commission income is slated to increase in FY20, with the company’s plans to slide into fintech with loan and insurance services. The company also started a recharge loan facility, that leads to an increase in commission as well as earned the company Rs 15-20 worth interest per transaction. 

Recently, it had partnered with a Mumbai based NBFC HappyLoans to provide the financial services and has received undisclosed funding from ICICI Bank Ltd. for its growth plans. It is even working on creating an alternate credit scoring system of its own for the unbanked target market that uses their call histories and application data on their phones to generate a score, as per the plans revealed by Charlie Lee in the interview.

Which in itself is a major concern as it is a massive infringement of users privacy. Case in point, the application is not available on iOS because of the kind of permissions it asks from its users.

It was the other (majorly interest) income of the firm that took a massive 7.9X jump from Rs 14 lakhs to Rs 1.1 crore in the latest fiscal. This counts the significant increase in short term loans and advances from Rs 2.34 crores to Rs 11.54 crore - a 4.9X leap.

On the other hand, the expenses on payment gateway services for True Balance were more than the commission it earned. These expenses grew 5.4X from Rs 60 lakhs to Rs 3.26 crore. Another peculiarly high expense for the firm was listed as guest house expenses that grew from Rs 65.72 lakhs to Rs 1.63 crore.

The firm also pays an annual royalty fee to its holding Korean entity.

Maintaining its position as the highest cost, advertisement expenses for the firm were Rs 31.78 crore in FY19, almost a crore more than last fiscal. This is a positive indicator as the minor 3% increase in this expense contributed to a 50% increase in revenue. Talking about the marketing strategy in an exclusive interview with Entrackr, Charlie Lee, CEO and Founder of the claimed that firm is only focussing the marketing plans on the target market, i.e. the 1 billion unbanked users in tier II and tier III cities.

On a side note, this seems like a vague and sketchy plan given the market reach of the company practically is minimum, even as it claims a user base of 70 million users.

This SoftBank backed company follows a capital intensive model, where the debt is minimum at around Rs 3 lakhs for a car loan. All the money received in the Indian entity is via its holding Korean entity. In FY19, the firm also increased its cash and cash equivalents from Rs 3.83 crore to Rs 16.1 crore, to maintain high liquidity to issue loans and other financial services to its target market.

Aligned with its plan, the company has created a set of financial statements in FY19 that allows the firm the space to execute its plans in FY20. However, with a user base claim that looks a bit exaggerated and plans that are concerning for users, it is uncertain, the future of True Balance in India.